Original, AI-authored English practice with worked guidance. Selected topics only; independent teacher review is pending. This is not a complete syllabus, official past-paper collection or predicted exam score. Check your own exam-board specification: these concepts are not certified against a particular board or exam year.
72 original questions across 13 selected topic areas. No account or payment required to practise.
6 questions in this topic. Exact English revisions checked in an AI-assisted academic review; independent teacher approval is still pending.
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Original targeted practice for selected 2027 content; indicative answers, not complete syllabus coverage or teacher approval.
Selected subtopics: Shutdown and strategic interaction · Labour demand and poverty · Money and expectations
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Question 1Fictional price-taking firm at its best positive short-run output sells100 units at price6. Its variable cost there is400 and fixed cost300; price exceeds minimum AVC. Compare operating with shutting down for the period, assuming fixed cost is unavoidable.4 indicative marks
Fictional price-taking firm at its best positive short-run output sells100 units at price6. Its variable cost there is400 and fixed cost300; price exceeds minimum AVC. Compare operating with shutting down for the period, assuming fixed cost is unavoidable.
Cambridge 2027: Direct conceptual match
Independently calculatedloss100 versus300 and stated why P<AC need not imply immediate shutdown.
Do not reject production merely because price6 is below AC7. AVC is4 at the stipulated best output; revenue covers variable costs and200 of fixed costs. Compare loss100 with shutdown loss300. The question supplies the optimum and AVC condition; one cost observation alone would not prove the firm's global optimum.
Self-marking points
Operating revenue=600; total cost=700, giving loss100.
Shutdown produces zero revenue/variable cost but still loses the fixed300.
Operating contributes200 toward unavoidable fixed cost and loses less than shutdown.
This supports short-run operation, not indefinite survival when all costs become avoidable.
Examiner tip
The short-run shutdown decision compares avoidable costs, not just accounting profit.
Question 2Fictional one-shot game: two firms choose High or Low price. Profits(A,B) are(H,H):(8,8),(H,L):(2,10),(L,H):(10,2),(L,L):(4,4). Identify each best response and the equilibrium. Explain why the joint-profit-maximising outcome may fail.4 indicative marks
Fictional one-shot game: two firms choose High or Low price. Profits(A,B) are(H,H):(8,8),(H,L):(2,10),(L,H):(10,2),(L,L):(4,4). Identify each best response and the equilibrium. Explain why the joint-profit-maximising outcome may fail.
Cambridge 2027: Direct conceptual match
Checked all four unilateral best-response comparisons and joint totals16 versus8; no invented market evidence.
Read payoffs from the correct firm's coordinate and hold the rival fixed for each comparison. Dominant Low for both yields the one-shot Nash equilibrium. A high-price agreement is not self-enforcing in this matrix; repetition, enforcement or law would require additional analysis not supplied here.
Self-marking points
If B chooses High, A gets10 with Low rather than8 with High.
If B chooses Low, A gets4 with Low rather than2 with High; symmetry gives B the same dominant Low strategy.
The mutual best response is(Low,Low), profits4 each.
Joint profit16 at(High,High) exceeds8 at(Low,Low), but either can gain from unilateral undercutting when the rival stays High.
Examiner tip
Highest combined profit is not automatically a Nash equilibrium.
Question 3Fictional competitive output/labour markets: output price5; marginal products of successive workers10,8,6,4. Each worker costs wage30 and these are the only marginal costs. Find marginal revenue products and the greatest employment level at which MRP covers the wage. What if wage rises to35?4 indicative marks
Fictional competitive output/labour markets: output price5; marginal products of successive workers10,8,6,4. Each worker costs wage30 and these are the only marginal costs. Find marginal revenue products and the greatest employment level at which MRP covers the wage. What if wage rises to35?
Cambridge 2027: Direct conceptual match
Computed50,40,30,20 and addressed equality/indifference explicitly to avoid an ambiguous hiring key.
Multiply each worker's additional output by5. Compare the marginal receipt with the extra wage, not total sales per worker. At30 the third is indifferent at the margin so the requested greatest level is3; at35 its MRP30 is insufficient. A monopsonist faces a different marginal hiring-cost problem.
Self-marking points
MRPs are50,40,30,20.
At wage30, up to3 workers cover their wage; the third is marginally break-even.
At wage35, up to2 workers cover their wage.
Labour demand is derived from output revenue; the result depends on the fixed output price and marginal-product schedule.
Examiner tip
An average product is not the marginal revenue product.
Question 4Fictional benefit rule: an extra20 of gross weekly earnings causes income tax to rise4 and means-tested benefits to fall12. Calculate the disposable-income gain and effective withdrawal rate. Explain a possible incentive effect and distinguish it from a guaranteed refusal to work.4 indicative marks
Fictional benefit rule: an extra20 of gross weekly earnings causes income tax to rise4 and means-tested benefits to fall12. Calculate the disposable-income gain and effective withdrawal rate. Explain a possible incentive effect and distinguish it from a guaranteed refusal to work.
Cambridge 2027: Direct conceptual match
Checked netgain4 and80% marginal withdrawal; no universal behavioural prediction.
Combine tax and benefit withdrawal; considering tax alone would give20%, missing most of the incentive wedge. Disposable income still rises4. The poverty-trap mechanism concerns weak net rewards and barriers to escaping low income, not an assumption that every recipient behaves identically.
Self-marking points
Disposable-income gain=20-4-12=4.
Combined withdrawal is16/20=80%.
Keeping only4 of the extra20 can weaken the financial incentive to increase paid hours.
Non-financial benefits, career effects and individual circumstances mean actual labour response is not determined by this rate alone.
Examiner tip
A withdrawal rate is not the proportion of all income paid in tax.
Question 5Fictional quantity-theory exercise uses MV=PT with M=200,V=3,T=100. Find P. M rises10%; assume V and T remain fixed. Find the new P and explain why this is conditional, not an empirical law of one-for-one inflation.4 indicative marks
Fictional quantity-theory exercise uses MV=PT with M=200,V=3,T=100. Find P. M rises10%; assume V and T remain fixed. Find the new P and explain why this is conditional, not an empirical law of one-for-one inflation.
Cambridge 2027: Direct conceptual match
Independently verified6 and6.6; separated identity, assumptions and causal interpretation.
Rearrange to P=MV/T before substitution. The10% result follows from the stated behavioural restrictions, not merely from writing an identity. Changes in money demand, output or financial arrangements can alter the other terms.
Self-marking points
P=200*3/100=6.
New M=220 and new P=220*3/100=6.6.
The model implies a10% price increase under fixed V and T.
In an actual economy velocity or transaction volume can change, so the identity alone does not establish those fixed assumptions or causation.
Examiner tip
Do not treat fixed velocity as a fact true in every period.
Question 6Fictional economy starts with expected inflation2% and unemployment at its natural rate. Policymakers repeatedly try to maintain unemployment below that rate using demand expansion. Under an expectations-augmented Phillips-curve account, explain short- and long-run implications and one limit of this model.4 indicative marks
Analyse / Explain4 indicative marksNo calculator
Fictional economy starts with expected inflation2% and unemployment at its natural rate. Policymakers repeatedly try to maintain unemployment below that rate using demand expansion. Under an expectations-augmented Phillips-curve account, explain short- and long-run implications and one limit of this model.
Cambridge 2027: Direct conceptual match
Checked expectations adjustment and conditional no-permanent-tradeoff reasoning against10.2.5; no invented observed inflation outcome.
Distinguish a short-run curve drawn for given expectations from changes in those expectations. Demand policy need not permanently improve matching or productive capacity. The argument is conditional on the specified framework;2% is an invented starting expectation, not a reported country target or forecast.
Self-marking points
With expectations initially unchanged, surprise demand expansion can temporarily lower unemployment and raise actual inflation.
As expectations adjust, wage/price setting incorporates the higher expected inflation.
Maintaining unemployment below the natural rate would then require further inflation surprises; there is no stable long-run trade-off at a fixed inflation rate in this model.
Supply shocks, shifting natural-rate estimates and imperfect expectations formation limit simple forecasting from this account.
Examiner tip
A vertical long-run Phillips curve is not a claim that every observed short-run correlation vanishes.
